Business Update. LNG development in Papua New Guinea. CEO, Dr Michael Hession. January 27, 2015 Singapore

Transcription

1 Business Update LNG development in Papua New Guinea CEO, Dr Michael Hession January 27, 2015 Singapore

2 Disclaimer: Contents And Forward Looking Statements This presentation includes forward-looking statements as defined in United States federal and Canadian securities laws. All statements, other than statements of historical facts, included in this announcement that address activities, events or developments that InterOil expects, believes or anticipates will or may occur in the future are forward-looking statements, including in particular, the presence of shallow marine carbonate reservoir, hydrocarbon volumes, and the estimated drilling time. These statements are based on our current beliefs as well as assumptions made by, and information currently available to us. No assurances can be given however, that these events will occur. Actual results could differ, and the difference may be material and adverse to the Company and its shareholders. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause our actual results to differ materially from those implied or expressed by the forward-looking statements. Some of these factors include the risk factors discussed in the Company s filings with the Securities and Exchange Commission and on SEDAR, including but not limited to those in the Company s Annual Report for the year ended 31 December 2013 on Form 40-F and its Annual Information Form for the year ended 31 December In particular, there is no established market for natural gas or gas condensate in Papua New Guinea and no guarantee that gas or gas condensate from the Elk and Antelope and Triceratops fields will ultimately be able to be extracted and sold commercially. Investors are urged to consider closely the disclosure in the Company s Form 40-F, available from us at or from the SEC at and its Annual Information Form available on SEDAR at Finances are reported in US$ unless otherwise stated. 2

3 Disclaimer: Resources Reference is made in this Presentation to Resources. It should be noted that we have no production or reserves or future net revenue as defined in NI or under definitions established by the United States Securities and Exchange Commission. GLJ, an independent qualified reserves evaluator, effective as of December 31, 2013, evaluated our gas and condensate resources for the Elk, Antelope and Triceratops fields, all of which are in onshore Papua New Guinea. The GLJ 2013 Report, with a preparation date of March 11, 2014 was prepared in accordance with definitions and guidelines in the COGE Handbook and NI This Presentation outlines GLJ's estimates contained in the GLJ 2013 Report effective December 31, 2013 of total and net contingent resources for gas and condensate at the Elk and Antelope field and the Triceratops field, unless otherwise stated. This Report is included in the Company s Annual Information Form which is filed at SEDAR and is available on our web-site. All resources estimated for the Elk and Antelope fields are classified as contingent resources economic status undetermined. At this early stage of appraisal, the resources estimates for the Triceratops field are classified separately in the GLJ 2013 Report as either contingent resources economic status undetermined or prospective resources. Contingent resources are those quantities of natural gas and condensate estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. The economic status of the resources is undetermined and there is no certainty that it will be commercially viable to produce any portion of the resources. Accuracy of Resource Estimates The accuracy of resource estimates is in part a function of the quality and quantity of available data and of engineering and geological interpretation and judgment. Other factors in the classification as a resource include a requirement for more appraisal wells, detailed design estimates and near-term development plans. The size of the resource estimate could be positively impacted, potentially in a material amount, if additional appraisal wells determined that the aerial extent, reservoir quality and/or the thickness of the reservoir is larger than what is currently estimated based on the interpretation of the seismic and well data. The size of the resource estimate could be negatively impacted, potentially in a material amount, if additional appraisal wells determined that the aerial extent, reservoir quality and/or the thickness of the reservoir are less than what is currently estimated based on the interpretation of the seismic and well data. 3

4 InterOil Focused strategy Find hydrocarbons monetize develop. Do it again. Key points preparing for growth 2. Antelope focus on LNG development planning 3. Strong balance sheet financial discipline 4. Certification payment cash payment expected before year-end 4

5 2014 preparing for growth New management team Multi-billion dollar deal completed with Total SA $526m sale of refinery and downstream business New $300m credit facility New exploration licenses awarded for up to 11 years Five consecutive discoveries, Raptor and Bobcat in 2014 New Chairman and two new directors, board renewal on-going Offices consolidated from four to two 5

6 Commanding acreage position in Eastern Papuan Basin Commanding position in heart of basin Eastern Papuan Basin is relatively unexplored compared to Western Papuan Basin InterOil holds material equity across its exploration acreage which includes 5 consecutive discoveries Triceratops Bobcat Raptor Elk Antelope Acreage awarded for up to 11 years License Acreage (Acres) IOC Stake % (Gross) PRL , % PRL , % PPL 474 1,232, % PPL , % PPL 476 1,215, % PPL , % TOTAL 3,978,828 Port Moresby 6-6-

7 Elk-Antelope: A cost-advantaged project Project PNG LNG Elk-Antelope Number of fields 7 1 P nyang Field PNG LNG Gas Distance to Port Moresby ~690km ~340km Purari River Onshore pipeline Highlands (~300km) Near Shore (~90km) Purari River Triceratops Field 69.1% IOC equity River access No Yes Elk-Antelope Field 36.5% IOC equity Regional population >850,000 ~120,000 Capex per ton (Analyst estimates based on two trains) $2,324 /mtpa $2,051 /mtpa Source: Wood Mackenzie, broker research, and internal estimates Population data from 2011 census, PNG LNG includes population in Hela and Southern Highlands PNG LNG pipeline PNG LNG Plant Port Moresby 7

8 Prospective low-cost, high return LNG project $30 Development Cost ($/boe) 25% IRR% $25 20% $20 15% $15 $10 $5 10% 5% $0 P2 Elk- P1 P5 P8 P3 P9 P6 P7 P4 P10 Antelope Consensus $20 0% Elk- Antelope Consensus Breakeven Price ($/mmbtu) at 10% return P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 $16 $12 $8 $4 $0 Elk- Antelope Consensus P2 P1 P3 P5 P$ P7 P6 P9 P8 P10 Source: Wood Mackenzie, broker research, as of Nov 2014 Note: Elk-Antelope consensus based on a two-train LNG development IRR estimate excludes contingent resource and milestone payments from Total SA and illustrated based on published broker IRR estimates Peers (P1-P10) from Australasia in alphabetical order: Australia Pacific LNG, Browse, GLNG, Gorgon, Ichthys, North West Shelf, Pluto, PNG LNG, Prelude FLNG, Wheatstone 8

9 Appraisal program well advanced Antelope-4 successfully intersected top reservoir Top reservoir intersected at 1,911 meters TVDSS* Result reduces risk of steep-dipping southern flank 3D Map of Antelope** Antelope-1 Antelope-3 N Antelope-5 drilling ahead with testing planned for Q Continues to drill towards top reservoir Extended flow test to commence on completion of Antelope-5 Pressure gauges at other appraisal wells will monitor reservoir interconnectivity and productivity Antelope-2 Tests expected to be completed before end of Q Antelope-5 Antelope-6* Antelope-6 decision imminent Antelope-6 to separately appraise eastern flank upside Antelope-4 Pending JV approval, expected to spud in late Q Field Bounding Fault Gas-Water Contact * TVDSS True Vertical Depth Sub Sea ** Well locations are for illustrative purposes 9

10 Elk-Antelope: development timetable Indicative timeline for LNG development by Total SA (December 2014) Concept selection (Q2 2015), early works (Q3 2016), construction (Q3 2017) Source: Total SA, PNG Mining and Petroleum Conference, Sydney, December

11 Planned drilling program Exploration Well Type Q Q Q Q Q Q Bobcat-1 Exploration Discovery declared December Wahoo-1 Exploration Well suspended due to high pressures July 2014 Expected return to Wahoo Q2/Q Raptor-1 Exploration Discovery declared November 2014 Expected return to Raptor Q2/Q Antelope-4 5. Antelope-5 Appraisal (carry from Total SA) Appraisal (carry from Total SA) Spudded September 2014 Spudded December 2014 Extended flow test at Antelope-5 & monitor responses in other wells Certification 6. Antelope-6* Appraisal (carry from Total SA) Expected spud Late Q2 7. Triceratops-3 Appraisal Expected spud Q Antelope Deep* Exploration (carry from Total SA) Expected spud 2H 2015 *Pending JV approval, InterOil has access to five rigs 11

12 Fully funded with focus on cost Fully funded JUNE 30, 2014 Q3 MOVEMENT SEP 30, 2014 $754m liquidity at end of Q US$m Includes undrawn $300m credit facility 1, Business streamlined, strong focus on cost Divested refinery and downstream business Improve drilling efficiency to minimize costs Outsourcing non-core, supply chain functions 600 $585m (e.g. site construction, roads) 500 $885m Disposal of excess equipment 400 $754m Leverage contractor competiveness in low oil price environment 300 Four offices consolidated to two 200 $300m Exploration Facility Cash Q Liquidity Share Buyback Drilling costs Raptor, Bobcat, Wahoo Seismic, inventory and other costs Q Liquidity 12

13 Next liquidity injection INDICATIVE PAYMENTS TO INTEROIL InterOil signed deal with Total SA on March 26, 2014 Fixed and contingent payments Largest cash proportion expected at certification (expected 2H 2015) Wildcard certification Exploration bonus US$m 4,000 3,500 3,000 2,500 2,000 First Cargo Payment $65m FID Payment $517m Carry (75% carry on appraisal + exploration) 1,500 1, ,156 1,356 1,557 1,717 2,480 Certification payment Expected 2H $401m completion payment (received March 2014) GCA P50 Estimate GLJ Low Estimate GLJ Mid- Estimate GLJ High Case Estimate 13

14 Summary First-Class Team Fantastic Assets Focused Funded New and experienced board and management Three new board members appointed in 2014 Strong Government relationships Commanding position with material equity in highly prospective Eastern Papuan Basin 5 consecutive discoveries Includes world-class Elk- Antelope field, PNG s largest undeveloped gas field Develop Elk-Antelope as one of the lowest-cost LNG projects in Asia-Pacific Appraise new discoveries and continue exploring for more Financial discipline and operational efficiency Fully funded with $754m liquidity at end of Q Strong focus on cost minimization and performance improvement Now moving into appraisal phase where well costs are predominantly carried 14

15 Thank You For more information, please contact: Senior Vice President, Investor Relations Vice President, Investor Relations

16 Appendix

17 Appendix: Leadership team CEO COO CFO GENERAL COUNSEL MICHAEL HESSION JON OZTURGUT DON SPECTOR GEOFF APPLEGATE >30 yrs experience Mega-projects, emerging provinces Ex-BP, Woodside >30 yrs experience M&A, strategy, LNG, operations Ex-Arco, Pioneer, CMS >30 yrs experience Project financing, treasury, tax Ex-BP, Woodside >40 yrs experience Corporate oil and gas, mostly in PNG Ex-Gadens (Partner) SVP Exploration SVP Development EVP PNG SVP Corporate LAURIE BROWN DAVID KIRK ISIKELI TAUREKA THOMAS NADOR >30 yrs experience Emerging provinces Ex-BP, Shell >30 yrs experience Mega-project development Ex-BP, Woodside >30 yrs experience Corporate finance, country management Ex-Chevron, National Australia Bank >20 yrs experience LNG project management, strategy Ex-Fluor, Woodside 17

18 Appendix: Board of Directors CHAIRMAN DEPUTY CHAIRMAN CEO AND DIRECTOR DIRECTOR CHRIS FINLAYSON FORD NICHOLSON MICHAEL HESSION ELLIS ARMSTRONG >30 yrs in international oil, gas, LNG development, Director, Lloyd s Register Formerly: CEO, BG Group, senior Managing Director, Shell >30 yrs in North American and global oil and gas project development Presently: President, Kepis & Pobe Financial, Chairman, BNK Petroleum >30 yrs experience in mega-projects, emerging provinces Formerly: BP, Woodside >30 yrs in international oil, gas Formerly: CFO, BP s E&P business DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR ROGER LEWIS SIR RABBIE RAMALIU SIR WILSON KAMIT SAMUEL L. DELCAMP KATHERINE HIRSCHFELD >30 yrs in commercial finance for oil, gas and LNG projects Formerly: Group Financial Controller, Woodside >40 yrs in PNG public and business affairs Formerly: PNG Prime Minister and Speaker, PNG Parliament >40 yrs in PNG public and business affairs Formerly: Governor of Bank of PNG, PNG Governor to IMF, Director of ADB >40 yrs in US business, investment and public affairs Formerly: Executive Director and Chief Financial Officer, Fuller Foundation >20 years with BP Presently: Director, Transfield Services, Toxfree Solutions (ASX); UN Women Australia 18

19 Appendix: LNG demand and contracted supply Market dynamics Global LNG demand expected to reach nearly ~600 MTPA by 2035 Asian LNG demand expected to double to >400 MTPA from 2015 to 2035 (70% of global demand) Traditional LNG buyers (JKT) Japan, South Korea, Taiwan Emerging buyers China, India, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam Buyers value geographical diversification of supply Contracted global supply currently peaks at ~350 MTPA in 2021 MTPA Global LNG Demand Global contracted supply Asia Pacific Europe Middle East North America South America Total LNG Demand Source: Wood Mackenzie 19

20 Appendix: Total SA A global leader in LNG PRL15 Ownership Total s Global LNG Projects Source: Total SA 20